Businesses and establishments such as retail stores, malls, and restaurants often have a need to accurately record the identity of customers or visitors for marketing, security, and financial purposes. These businesses seek to encourage repeat customers and habitual shopping by customers. One way in which merchants and restauranteurs have encouraged repeat business has been through loyalty marketing programs, or what are sometimes known as frequent buyer programs. A loyalty marketing or frequency marketing program tracks the spending habits of the participating consumers at a given retail store, restaurant, mall or other groupings of merchants. When the consumer has made a certain number of purchases (defined by the loyalty/frequency marketing criteria), the consumer qualifies for some type of promotional action, which often means that the consumer can redeem points (or the like) for awards or purchase discounts.
There are two general types of loyalty marketing programs. The first type of program is one that follows an "automatic issuance" protocol. In this type of program, the award (or a certificate that can be exchanged for the award) is automatically issued to the customer when a pre-set purchase amount is reached. The second type of loyalty marketing program uses a bank account metaphor. A bank account (of either points or dollars) is used to keep score, and track the consumer's spending over a period of time. Purchases credit the balance in the bank account, and redemptions debit the balance.
Frequent-buyer programs can be a cost-effective way to target advertising and promotions to past customers. Past customers are a very responsive market segment, and by definition, these customers are aware of the advertiser's location, product, quality, and value levels. Reminding customers of the advantages of a familiar merchant is a very effective method of advertising. The customer mailing list created by these programs often cannot be created as effectively by other methods. Frequent-buyer programs also help merchants and service providers to gain incremental sales by offering their customers added value in a very visible way. Frequent-buyer programs are also used to capture competitors' customers and to attract new buyers to a product or service. The program awards are outside of the customer's usual budget, and allow purchases that normally would not come out of a business or family budget. For this reason, these programs are attractive to consumers.
In the past, a loyalty marketing program might be administered by issuing a specialized identification card to each of the consumers who wish to participate in the frequent buyer program. The cards are created and the program is administered by the retail store or a third party retained by the retail store to administer the program. Typically, the program requires that the consumer present the card to the clerk at the point of sale (e.g., check-out line) at the time purchases are made. The clerk then updates the card to reflect the new purchase, and/or uses the card to identify the participant and update a database that is set up to track purchases by the participants.
The success of prior loyalty marketing programs has been limited by a number of factors. Often, the consumer learns of the loyalty program from in-store signage, sales people, or advertising. Yet consumers do not always participate in the program because the consumer has to take the time to provide the information about him or herself necessary to administer the program, which may involve completing a form provided by the retail store. Also, those who do participate in the program cannot consistently do so effectively because they are required to carry with them the identification card issued by the retailer. The consumer will often neglect to carry the necessary card when visiting the store to make a purchase. Thus, because the consumer's identification card (and account number) are not always available, the consumer's purchases are not consistently and accurately recorded.
Merchants and restauranteurs may also be reluctant to engage in loyalty marketing programs because of the significant cost of issuing cards and purchasing the necessary equipment and materials. Administering the program can also be quite costly. Simply constructing the database from manually-completed enrollment forms would typically involve manual data entry that can be inaccurate, costly, and time-consuming.
What is needed, therefore, is a system for more effectively administering frequency marketing programs at a lower cost, and with greater participation of consumers, while at the same time avoiding the drawbacks of prior marketing programs. Preferably, such a system would be convenient for consumers, and would provide tangible benefits to participating merchants.